The DXY printed near two-month highs of 98.25 in N.Y. trade on Tuesday, with the Dollar finding support on solid incoming U.S. data. Durable orders rose more than expected, while consumer confidence printed better than consensus forecasts as well. The markets took a break from coronavirus panic, allowing Wall Street and Treasury yields to rise, though the situation, in China in particular will be watched like a hawk. EUR-USD touched trend lows of 1.0998 after the confidence data, later topping at 1.1015, as USD-JPY bounced from early lows of 108.93 to 109.21 on improved risk taking. USD-CAD fell from 1.3203 to 1.3170 as oil prices firmed. GBP-USD meanwhile, dipped to 1.2975 from over 1.3015.

[EUR, USD]EUR-USD traded below the 1.1000 mark for the first time since November 29, printing 1.0998 following the stronger U.S. consumer confidence print. The pairing has since headed back over 1.1005 on reported light short covering. Save-haven Dollar demand has been the major driver of EUR-USD weakness for the past several sessions, largely on the back of coronavirus fears, and resulting severe risk-off conditions. Markets are today taking a break from "sky is falling" mindset, though a worsening of the virus epidemic will likely see risk-off return quickly.

[USD, JPY]USD-JPY rallied modestly from three-week lows of 108.76 seen in London morning trade, peaking at 109.21 (location of the 50-day moving average) in Late morning N.Y. Some unwinding of the severe risk-off conditions provided support to the pairing, though with uncertainty surrounding the path ahead for the coronavirus outbreak, traders will be hesitant to sell the risk-sensitive Yen off too far. Aside from the overnight low, the next important support level for USD-JPY is the 200-day moving average, currently at 108.48.

[GBP, USD]The pound's losses accelerated into the London book closing before subsequently steadying. The decline came with UK rate markets discounting about 50-50 odds for the BoE to cut the repo rate by 25 bp at its policy review this Thursday. Cable printed an eight-day low at 1.2975. We don't expect the BoE to cut, and therefore anticipate some scope for a rebound in the pound. Our view is that the majority of the nine member Monetary Policy Committee will want to refrain from easing amid signs of a post-election rebound in economic activity, as evidenced by a much stronger than expected rebound in preliminary PMI and CBI industrial trends January survey data. We still expect dissension in the MPC ranks, with Saunders and Haskell seen repeating their call (for what will be a third successive meeting) for a 25 bp cut in the repo rate, to 0.50%, and possibly joined by their dovish MPC colleague Vlieghe.

[USD, CHF]EUR-CHF bounced from 33-month low at 1.0665 on Tuesday, topping at 1.0725 in N.Y. trade. Gains came as risk appetite returned to a degree, with markets taking a break from coronavirus panic. Concerns about contagion of the coronavirus have been affecting market sentiment across the world. The franc had already rallied strongly earlier in the month following the surprising decision by the U.S. to add Switzerland to its list of currency manipulators earlier in the week. The U.S. move seems a bit rich given the franc is a demonstrably chronically-overvalued currency in purchasing parity terms (as illustrated by the Economist's Big Mac index), though the Trump administration argues that Switzerland needs a more expansive fiscal policy.

[USD, CAD]USD-CAD printed near seven-week highs of 1.3206 into the North American open, since falling back to a low of 1.3170. The pairing continues to trade inversely with WTI crude prices, though today's flip to risk-on conditions has supported the Loonie to a degree as well. All eyes will remain on the coronavirus outbreak, and the impact it has on China's economy. Concrete signs of slowing there will likely pressure oil prices further, and result in USD-CAD heading higher. The 1.3231 200-day moving average is the next big resistance level.